Hakkani Pulp and Paper Mills Limited is set to issue new shares worth Tk16 crore in a move to meet its working capital shortfall and comply with the regulatory requirement of maintaining paid-up capital of Tk30 crore.
At present, the company’s paid-up capital is Tk19 crore, which will increase to Tk35 crore after the issuance of the new shares.
In a stock exchange filing on Tuesday, the company stated that it will issue 160 lakh new shares at Tk10 each. Of the new shares, 70 lakh will be issued for existing sponsors and directors, while the remaining for the company’s strategic investors who will become its shareholders after the issuance.
The new share issuance is subject to approval from the company’s general shareholders. For this, the company has scheduled an extraordinary general meeting (EGM) on 1 February 2024. The record date has been fixed on 9 January.
After securing the general shareholders’ approval, the company will apply to the Bangladesh Securities and Exchange Commission (BSEC).
Hakkani Pulp will use the raised fund to increase working capital and modify its units for uninterrupted operations, the disclosure reads.
Company Secretary Mohammad Musa told the EconomistPost, “For a few years now, we have been facing challenges because of a working capital shortfall.”
Moreover, outdated machinery and equipment are running the company’s paper units, which the company wants to modify. Also, another tissue unit’s fate is dependent on the paper unit’s working capital, he added.
As a result, the company couldn’t achieve its targeted revenue.
“We need funds. But as we can’t go for a repeated public offering (RPO) due to non-compliance with regulatory rules, we decided to rake in strategic investors as shareholders.”
“If we can use this fund properly, then the company’s revenue and profit will increase, and we will be able to pay better dividends to the general shareholders,” he further said.
In the July to September quarter of 2023, Hakkani Pulp’s revenue stood at Tk26.36 crore, which was Tk20.30 crore in the same period previous year.
Its after-tax net profit stood at Tk3 lakh, earnings per share at Tk0.02, and net asset value per share at Tk24.49 with revaluation at the end of September this year.
Hakkani Pulp’s shares closed at Tk64 each on the Dhaka Stock Exchange on Tuesday.
